Market seeks a break, but CN threatens derailment

The non-ferrous recycled metals market is still in its summer slump. It continues to experience sluggish intake, with scrap yards reporting that the flow of material remains slow. The slow physical market has also affected the secondaries, as they are said not be taking on any more material. That reluctance by the secondaries also highlights just how tough things are in the auto industry right now. When RMU spoke to people in the field, it was clear that no one is expecting a big surge in demand anytime soon. Instead, they’re just hoping the market can hang in there until after the U.S. elections, with the idea that their preferred candidate might just help turn things around.

The downstream market isn’t faring much better either, as the order books for the year over year are showing a noticeable decline. This decline is reflecting the weakened state of demand across the board. Sources are also saying that the service centers already have ample inventory due to the weak demand. This apparent abundance of domestic supply, coupled with diminished demand, paints a challenging picture for the industry in the near term.

It is time to start addressing the elephant in the room, yet another grey cloud that looms over the metals industry. The Canadian National (CN) rail strike. Although it’s not directly affecting the recycled metals industry yet, it is starting to concern the raw materials and base metals community. Especially when the U.S. imports over 850,000 metric tons (mt) of aluminum from Canada, an increase of 13% from previous years.

In a statement issued August 18, CN notified the Teamsters Canada Rail Conference (TCRC) of its intention to lock out employees starting August 22, unless a deal or binding arbitration is reached before then. Despite efforts to negotiate over the weekend, no significant progress has been made, and the two sides remain far apart. As a result, CN is gradually shutting down its CN rail network to ensure safety and minimize disruption, especially in case of a potential strike. They’ve also issued embargoes to halt the movement of goods across Canada during this period, with plans to lift these restrictions if an agreement is reached.

This lockout follows several failed attempts by CN to secure an agreement with the TCRC, including offers to raise wages and improve job security, all of which were turned down. Even the option of resolving the dispute through binding arbitration was rejected by the union. CN says these actions are necessary to protect the safety of communities and customers, and to manage the potential fallout from this labor dispute on the broader Canadian economy.

Canada has had its fair share of rail strikes, five in the last 12 years. The longest lasted nine days, while the shortest lasted only 16 hours. So, it’s hard to think that this lockdown will be any different.

RMU will keep you updated on any further developments.